Getting on Board: a Governance Resource Guide for Arts Organisations
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GETTING ON BOARD: A GOVERNANCE RESOURCE GUIDE FOR ARTS ORGANISATIONS PREPARED BY GRAEME NAHKIES FOR CREATIVE NEW ZEALAND CONTENTS: FOREWORD 05 SECTION 1.0 INTRODUCTION 07 1.1 Creative New Zealand governance support 08 1.2 The need for leadership and effective governance 09 1.3 Terminology 10 1.4 Guidebook structure 10 1.5 Sample policies 11 SECTION 2.0 TYPICAL GOVERNANCE CHALLENGES 13 SECTION 3.0 THE ROLE OF THE GOVERNING BOARD 17 SECTION 4.0 THE LEGAL AND ACCOUNTABILITY FRAMEWORK 19 SECTION 5.0 STAKEHOLDER RELATIONSHIPS 23 SECTION 6.0 POLICY LEADERSHIP 27 6.1 What are policies and how are they made? 28 6.2 Governance policies 29 6.3 Developing, adopting and reviewing governance policies 29 6.4 The chief executive’s own operational policies 30 SECTION 7.0 DETERMINING THE ORGANISATION’S STRATEGIC DIRECTION 31 7.1 The need for boards to give direction 32 7.2 Tools for strategic thinking 35 SECTION 8.0 BOARD–CHIEF EXECUTIVE RELATIONSHIPS 39 8.1 Appointing the chief executive 40 8.2 Making clear the extent of delegation to the chief executive 44 8.3 Constraining the chief executive’s freedom to act 44 8.4 The chief executive/board chair relationship 46 8.5 Evaluating the chief executive’s performance 46 SECTION 9.0 MONITORING AND EVALUATING RESULTS AND ACHIEVEMENTS 49 9.1 Measuring outcomes not effort 50 9.2 Monitoring systematically 50 9.3 Providing the board with the right information 51 9.4 The board’s organisational ‘dashboard’ 53 9.5 The chief executive/board chair relationship 54 SECTION 10.0 A STRATEGIC RISK MANAGEMENT FRAMEWORK 55 10.1 What is risk? 56 10.2 Strategic risk management 57 10.3 Clarifying the board’s responsibility for risk 58 SECTION 11.0 THE BOARD’S FINANCIAL RESPONSIBILITIES 61 SECTION 12.0 THE BOARD’S OWN PROCESSES AND PRACTICES 65 12.1 Board membership 66 12.2 Conflicts of interest 67 12.3 Board meetings 68 12.4 Typical agenda distractions 69 12.5 Develop a longer term view of the board’s priorities 70 12.6 Board committees 71 12.7 The role of the chairperson 73 12.8 Board performance evaluation 74 12.9 Succession planning 75 SECTION 13.0 RESOURCE MATERIALS 77 13.1 Books 78 13.2 Periodicals 81 13.3 Web sites 82 03 04 FORWARD: Kia ora koutou In April 2001, Creative New Zealand published the first edition of Getting on Board: a governance resource guide for arts organisations written by Graeme Nahkies, Director, BoardWorks International. Since that time, Creative New Zealand has continued to promote the development of governance capability in the arts sector by means such as special forums promoting governance skills development. To support that process a second updated and extended edition of Getting on Board was published in 2003. It has proved as popular and as useful a resource for the many generous members of the community who make a contribution by serving on boards. This edition, while still including the fundamentals of good governance practice described in the earlier editions, also includes new material on a number of topics such as performance monitoring, agenda management, chairing the board and succession planning. Creative New Zealand anticipates that this expanded tool kit will further assist board members to confidently do their jobs even better. Since the publication of the 2003 edition, Graeme Nahkies has continued to facilitate governance- related workshops both for the board members and staff of Creative New Zealand’s recurrently funded organisations and for community arts organisations. Feedback and input from arts sector representatives during those workshops has guided this fine-tuning. My warm thanks to the external readers, the organisations that supported this initiative and especially to Graeme for his expertise and knowledge, as well as his ability to relate generic principles to the New Zealand arts environment. Heoi ano STEPHEN W AIN W RIGHT Chief Executive Creative New Zealand November 2008 05 [ CREDIT WWW.gowlangsfordgallery.CO.NZ 0 JUDY MILLAR, UNTITLED, 2007. 6 ImAGE COURTESY OF ] GOW LANGSFORD GALLERY. INTRODUCTION E 2008 H AS A PART ESTIVAL. F M NZ . RTS SEA CTION1 CO . IPIA PERFOR R catto . RA, PRESENTEDT BY T HE LEADERSHIP OF arts organisations IN NEW ZEALAND – O WWW A AS IN MANY other parts OF THE world - IS not GETTING ANY NTERNATIONAL NTERNATIONAL M I A T EASIER. AS arts practitioners improve THEIR atto U T C A ‘PERFORMANCE’ THERE IS MORE PRESSURE ON THOSE involved M A T IN THE governance AND management BEHIND THE SCENES EW ZEALAND obert ONI HUATA AND MINA T R OF INN arts organisations to LIFT THEIR GAME AS WELL. [CREDIT] 07 CREATIVE NEW ZEALAND 1.1 GOVERNANCE SUPPORT The leadership of arts organisations in New Zealand – Starting in May 1999, the Arts Board of Creative as in many other parts of the world – is not getting any New Zealand commissioned Graeme Nahkies from easier. As arts practitioners improve their ‘performance’ BoardWorks International, a specialist trans-Tasman there is more pressure on those involved in the governance consulting group, to assist it in a governance governance and management behind the scenes in research project that would ultimately support and arts organisations to lift their game as well. strengthen the governance performance of arts This is not particular to the arts sector. Since organisations throughout New Zealand. the late 1980s there has been a growing public interest The first stage, involving a cross-section of in, and understanding of, the importance of the 10 leading arts organisations, was exploratory – performance of the governing board of any organisation. a reconnaissance to identify the organisations’ approach As each new edition of Getting On Board has been to governance and to understand their principle prepared, the subject of effective corporate governance governance challenges. Key issues identified in the has continued to be a hot topic. It is clear that the reconnaissance stage were then explored further, expectations stakeholders have of boards and directors drawing on a wider range of views and experiences. are ever increasing. As a result, there has been an This phase was extended to the board members and accompanying increase in the breadth and depth of the senior staff of all 31 organisations that were, at that tasks in which a board and its individual members time, recurrently funded by Creative New Zealand. must be competent. Two other organisations that were not recurrently For nearly 10 years now, Creative New Zealand funded by Creative New Zealand also took part. has encouraged arts boards in New Zealand to take This enabled preliminary conclusions to be drawn up the challenge of providing effective governance about governance performance in the arts sector in leadership and many have responded positively and New Zealand and to identify key areas to which future effectively to this challenge. However, one size does not support and development initiatives should be targeted. fit all; each arts organisation and its board are faced with The development of the first edition of this guide was the need to find an approach to the governance of their the third stage. During 2000 a draft was presented at a enterprise that works. Nor is this a ‘one-hit’ exercise. series of workshops around New Zealand. The feedback As board membership and organisational circumstances from those sessions was reflected in the first edition change, so do the governance challenges. Many of the of this document. performance challenges facing arts boards are, however, Since then, each year, Creative New Zealand has generic. They appear in a wide range of international arranged for governance development workshops to be and organisational contexts and occur irrespective of held around the country. The content of these workshops underlying organisational sector, purpose or and the discussion among participants has strongly characteristics. There is much knowledge and contributed to the evolution of the material in this experience that can be pooled and shared to the publication. This approach is consistent with the original advantage of all boards. idea that the contents of the guide should be updated and added to progressively. 028 THE NEED FOR LEADERSHIP 1.2 AND EFFECTIVE GOVERNANCE Arts organisations, whatever their art form, size or The crucial starting point for the board of any arts scale, operate in a complex and demanding organisation might well be a conversation about the environment. In a positive sense there is a growing standard of governance performance that would match appreciation of the value of the arts not only to the that expected of the artistic/service ‘delivery’ part of enhancement of the quality of life in New Zealand but the organisation. Just what those standards should be also to the expression of a unique national identity and and how they should be attained is not always clear. spirit. Public and practitioner expectations of artistic Many who come to the governance of arts organisations achievement are ever increasing. Less positively, the have had little experience in any governance role. increasingly diverse and high-quality artistic initiatives Others, for example, may be experienced directors in, in New Zealand are competing for support from the say, the business sector, but often find that their public, patrons, sponsors and the Government which, experience does not always transfer easily into the in financial terms at least, is inherently limited. Arts not-for-profit arts sector. organisations often seem to be locked in a never-ending Concepts of best practice change over time. struggle to maintain financial solvency, a problem by Good governance in any sector is a work in progress but no means confined to New Zealand.